Mon, 12 Jul 2021 | BUSINESS NEWS
An analysis of new government figures has revealed that corporate insolvencies in the UK fell by more than half during the first six months of the year in comparison to the same period in 2020. The analysis, from Interpath Advisory, showed 301 companies falling into insolvency during the first half the year, compared to 655 in the first half of last year.
The sharp drop has again raised concerns that government support schemes during the COVID-19 pandemic have been propping up “zombie companies” and that the withdrawal of support schemes, such as furlough, could lead to a huge wave of insolvencies. New data has also revealed that emergency government-backed loans for UK companies during the pandemic have totalled close to £80 billion.
Interpath Advisory’s analysis of notices posted in The Gazette showed that business collapses reached particular lows in May and June of this year – with just 32 insolvencies in each month.
Regarding the issue of “zombie companies”, Interpath Advisory chief executive Blair Nimmo said: “The dichotomy of having historically-low insolvency rates at a time of significant economic crisis is naturally prompting concern in some quarters that the taxpayer is propping up an army of zombie companies.”
“But while it is fair to say that insolvencies are being supressed artificially thanks to the raft of support available, we also know there are lots of good businesses out there whose balance sheets are broken solely due to the impact of the pandemic – so it is only right they continue to be given the time and the support to be able to build their way back out of the crisis.”
Mr Nimmo said that “while insolvency practitioners will inevitably get busier”, as support schemes like furlough are withdrawn, "I don’t think we will see the deluge of corporate failures that many have predicted.”
Mr Nimmo also said that some firms could see their post-COVID recovery impacted by rising inflation and shortages of raw materials and labour. However, he added that companies could tap into increasing consumer demand as lockdown eases to raise their prices and provide a valuable boost to cashflow and profits.
View the latest distressed UK businesses here.
This well-established company is a leading provider of recruitment services and staffing solutions in the care industry, boasting a large portfolio of highly trained staff and lasting relationships with over 135 clients. With 75% of its revenue from...
This company offers a unique blend of consultancy services and software platforms to enhance data utilisation and decision-making within the construction industry, boasting a strong client base of nationwide Tier 1 contractors. With plans to expand i...
This successful steel manufacturing and installation company boasts a well-established client base with over 20 years of loyal, repeat business, largely driven by word-of-mouth referrals. With minimal marketing efforts to date, the business presents...
18
|
Jun
|
Administrators seek offers for dairy-free alternative milk brand | ADMINISTRATION
Administrators from Interpath Advisory are seeking offers fo...
18
|
Jun
|
North Wales financial planner’s assets acquired from administration | BUSINESS SALE
The business and assets of a financial planning firm based i...
18
|
Jun
|
Accountancy firm secures PE investment for M&A drive | BUSINESS NEWS
Bishop Fleming, a 500-strong accountancy firm with 47 partne...
18
|
Jun
|
Energy consultancy group completes HSBC-backed acquisition | BUSINESS SALE
Energy consultancy group Optimised has completed the acquisi...
18
|
Jun
|
Accountancy firm secures PE investment for M&A drive | BUSINESS NEWS
Bishop Fleming, a 500-strong accountancy firm with 47 partne...
18
|
Jun
|
North Wales financial planner’s assets acquired from administration | BUSINESS SALE
The business and assets of a financial planning firm based i...
Business Sale Report is the complete resource for finding genuine acquisition opportunities.
Join today to receive:
All this and much more, including the latest M&A news and exclusive resources
Please choose your settings for this site below. For more information please read our Cookie Policy
These cookies are necessary for our website to function properly and provide you with access to all features.
These are analytics cookies that help us to improve the way our website works.
These are used to improve the functional performance of the website and make it easier for you to use.